Risky choices in strategic environments: An experimental investigation of a real options game
Morreale, Azzurra; Mittone, Luigi; Lo Nigro, Giovanna (2019-05-16)
Post-print / Final draft
European Journal of Operational Research
School of Business and Management
We find that decision makers are sensitive to the presence or absence of strategic uncertainty; indeed, in the presence of strategic uncertainty, first movers more often diverge from the behaviour predicted by the model. Given our experimental results, the theoretical model needs to be revisited. The standard model of monetary payoff-maximizing agents should be substituted by one of decision makers who maximize a utility function which includes the psychological cost induced by strategic uncertainty.
Morreale, A., Mittone, L., Lo Nigro, G. 2019. Risky choices in strategic environments: An experimental investigation of a real options game. European Journal of Operational Research, vol. 279, iss. 1, pp. 143-158. DOI: https://doi.org/10.1016/j.ejor.2019.05.013
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